Visitors take a look at a recent homebuyers’ expo at Bangkok’s Queen Sirikit National Convention Center, which includes an exhibition of NPA (nonperforming asset) and resale homes. JIRAPORN KUHAKAN

Despite government-sponsored property stimulus measures, the second-hand home market can expect a slow year ahead.

The two main reasons are homebuyers' continued concern about the sluggish economy and financial institutions' tough criteria on mortgage lending, especially for the lower-end condo segment.

Somsak Chutisilp, president of the Real Estate Sales and Marketing Association (Resam), says the weak economy has taken a toll on the purchasing power of local buyers in the second-hand home market and so it will remain in 2016.

"Buyers in the second-hand home market are not confident about overall economic prospects," he says. "Many of them delayed making decisions in September and October after learning there would be tax incentives for the property sector."

Sales picked up in November after the property stimulus measures became effective on Oct 29. But the incentives have failed to boost market sentiment as much as expected, largely because of the still-struggling economy.

The property tax incentives include a reduction in the transfer fee and the mortgage fee from 2% and 1% to 0.01% and a deduction in personal income tax for five years for a housing unit priced 3 million baht or less.

"Buyers do get benefits from the incentives, but many of them are unable to get a mortgage," Mr Somsak says.

Mortgage rules are stricter for buyers of second-hand homes priced 3 million baht or less, so their loan applications are often rejected. They also get a lower credit line and less attractive interest packages than buyers of higher-priced units.

Buyers of second-hand homes priced 5 million baht or more usually get mortgage approvals more easily, with a higher credit line and more attractive interest rates. Banks consider this group of buyers a stabler segment.

Visit Kunatharakul, managing director of property broker Realty World Alliance Co, says the second-hand home market this year and next will remain flat because the impact from the property tax incentives is unlikely to be strong enough.

"Buyers are very worried about the bigger impact -- the economic prospects," he says. "Demand for the second-hand home market exists, but it depends largely on location and economic conditions."

Resales of condos in the inner city remain active, as selling prices for units at newly launched projects are 15-20% higher than those at newly completed ones.

Surachet Kongcheep, associate director of property consultant Colliers International Thailand, says many second-hand condo units were offered for sale after the property tax incentives become effective, but active transactions were found in a few locations.

The active areas include upper Sukhumvit, Lang Suan and Silom, where new supply is limited. The price of a new unit is also much higher: 300,000 baht per square metre in Lang Suan, compared with less than 200,000 baht for a six-year-old second-hand unit.

The two most popular locations for second-hand condos are Thon Buri, with unit prices of less than 3.5 million baht or 90,000 baht per sq m, and Bang Na, with unit prices of less than 3 million baht or 80,000 baht per sq m.

"Economic sentiment is not good, which affects not only new housing units but also second-hand ones," Mr Surachet says.

"The property tax incentives helped boost the property market by 30% when they were used by the Abhisit Vejjajiva government, as the economy during the period was in a good condition. But this year the incentives may not work, due to tepid economic conditions."

Poomipak Julmanichoti, managing director of property consultant Plus Property Co Ltd, says the overall second-hand condo market has slowed in step with the ailing economy. Many units were untransferable and are back on the market again.

"Resale condo units are usually active during the transfer period, but this year some of these units could not be transferred because the buyers could not get a mortgage," Mr Poomipak says.

Such units return to the market to compete with other resale units. As the returned units are resold by developers, unit prices are usually lower than those of resale units offered by investors.

Plus Property this year expects to have 3.5 billion baht in sales from 340 resale units, of which 90% will be condos. The sales target is down by half from last year's.

The company has 6,300 resale units on hand worth a combined 59 billion baht. Of this amount, 5,700 units worth 50 billion baht are condos and 600 units worth 9 billion baht are single houses and townhouses. Of the total, 38% were developed by parent firm Sansiri Plc.

A man checks out deals for second-hand condominium units offered at a house and condo fair in Bangkok. PANUPONG CHANGCHAI

Phrom Phong and Thong Lor remained the most popular locations for resale condos this year. Those areas are convenient and popular in the active market of Japanese tenants. The unit price of a second-hand condo is as much as 40% less than a new unit's price.

For second-hand single houses, the most popular locations were Rama IX and Srinakarin, which are close enough to the inner city but have better access to expressways and Suvarnabhumi airport.

Resam's Mr Somsak, also the managing director of property brokerage firm BCP Housing Co, says the sweet spot for second-hand single houses is Srinakarin-Bang Na with units priced at 5-7 million baht.

Eastern Bangkok is matched by the Ratchapruek area in western Bangkok with units priced 5-7 million baht. The area has many community malls and properties located near the Blue Line extension. Ram Intra is another zone where demand for second-hand single houses is strong.

According to Realty World Alliance, Nonthaburi is the top location for buyers seeking a second-hand single house or townhouse priced 4-8 million baht and 1.5-2.5 million baht, respectively.

"Compared with others, Nonthaburi is a purely residential location with no factories," Mr Visit says. "It will be more popular after the Purple Line starts running in the middle of next year."

After Nonthaburi are Rangsit and Pathum Thani for single houses and Samrong and Phetkasem for townhouses, he says.

For second-hand condos, the top three locations are Ratchadaphisek from the Asok intersection to Ratchayothin for units priced 2-3 million baht, Sukhumvit Road from Nana to Ekamai for units priced 4-8 million baht, and Phahon Yothin Road from Victory Monument to Chatuchak for units priced 3.5-6 million baht.